GrubHub and Seamless Merge; Thoughts and Other Options

Last week, news came down about the merger of GrubHub and Seamless, two companies that offer online ordering capability for restaurants in over 500 cities across the US.

Restaurant customers love the convenience offered by these and similar programs. They can view menus and order directly from their computer or mobile device, from their home, the back of a cab or the lobby of a movie theater. They no longer need to deal with busy signals, overwhelmed staff, or the background noise common to so many eateries. Within seconds it’s possible to place an order, pay via credit card, and receive a confirmation from the restaurant.  In addition, GrubHub customers have easy access to all participating restaurants in their geographic area. It’s a great system that saves everyone time and is tremendously convenient for the customer.

For restaurant owners, GrubHub, Seamless and similar programs can be a valuable way to reach new customers. If you’re a participant, anyone looking for a restaurant in your area can find you, even if they’ve never heard of you before. These programs become a conduit for new business

There are downsides, however. These programs can be costly.  Most take a percentage of sales made with their program, typically starting at 5-10% with lower or basic listing placement.  These fees can increase  to 15-20% based on the monthly sales amount or for higher or featured placement on the list of available eateries. Seamless is listed in the article as taking 10% for sales of $10,000 or less per month; 14% for sales of $10,000 or more. That’s quite a chunk of change!

Another issue is that payments for online orders do not go directly to the restaurant.  Typically, they are held by the service provider until a specified payout date – usually every 30 days.   Sales percentage, marketing fees, and credit card processing fees are deducted from the total, and the balance is sent to the restaurant.  I feel the monies should go directly to the restaurant, who then can make monthly payments to the service provider.  Better yet, the money could be split directly to both parties at the time of purchase.

Finally, many of the service companies charge the same fees regardless of whether the customer finds the restaurant through their service, or through the restaurant. The result is a restaurant’s independent marketing of their online ordering system (through website, signage, messaging, social networks, print ads) ends up disproportionately benefiting the service company.  Eat24 is a company that does split their fees based on source: If a customer comes to you through their program, they charge 10%, but if the source is through your website, they drop this to 1% of your sale – a better option, but without the reach and audience that companies like GrubHub currently has.

I have researched a number of these programs while trying to find a solution that is effective and meaningful for both the customer and the business owner and have been able to provide an option for clients in our area that represents a great alternative.  In non-urban areas, people are not typically using services like GrubHub or Seamless to find take out options in their area, so most of the traffic is generated directly from the restaurant’s internal promotions.  Our program, through Central NY Mobile Marketing provides the online menu with ordering capability for a flat monthly fee regardless of the number of orders or amount of sales (through their website, mobile site or Facebook page), and the dollars are processed directly through the restaurant’s existing processor.  Additional details about our program can be found here.

We also offer monthly service packages and rates to help businesses develop a stronger online presence and communicate regularly with customers.   Learn more about our Marketing Service Packages Here.  Please contact Susan O’Handley at (607)643-5680 or email susan@cnymobilemarketing.com if you would like additional information.